February 3, 2017
By: Michelle Turner Roberts, Dan Fisher-Owens, Ben Flowe, Perry Bechky, Babak Hoghooghi, Ray Gold, John Ordway, and Jason McClurg*
With a stroke of his pen on January 13, 2017, by Executive Order 13761, President Obama effectively lifted the Sudan Sanctions, in recognition of the Government of Sudan’s progress in reducing offensive military action, improving humanitarian access, and cooperating with the United States in counter-terrorism efforts.
OFAC’s Broad General License
On Tuesday, January 17, 2017, just three days before the end of President Obama’s administration, the Treasury Department’s Office of Foreign Assets Control (“OFAC”) amended the Sudanese Sanctions Regulations (SSR) to include a broad general license in Section 538.540 (the “General License”). This action will authorize all transactions previously prohibited by the SSR as well as by Executive Orders 13067 or 13412, which imposed sanctions on Sudan. As a result of the General License:
- All property and interests in property of the Government of Sudan will be unblocked.
- All trade between the United States and Sudan that was previously prohibited by the SSR will be authorized, including imports of goods and services from Sudan and exports of EAR99 goods and services to Sudan.
- S. persons will no longer be prohibited from facilitating transactions between Sudan and third countries, to the extent previously prohibited by the SSR.
Attention to ‘Denied Party Screening’
Nevertheless, while the assets freeze on the Government of Sudan will end, parties blocked pursuant to Executive Order 13400 in connection with the conflict in the Darfur region will remain blocked, as will persons in Sudan blocked under anti-terrorism or other sanctions programs. As such, extra attention should be paid to what is called ‘denied party screening’, or checks done in order to vet those parties involved in an export transaction.
Export Restrictions and Arms Embargo Remain In Place
Additionally, the General License does not have an effect on export restrictions under the Export Administration Regulations (EAR), and Sudan is still subject to a U.S. arms embargo. Unless any further action is taken to ease these restrictions, a license will still be generally required for all items listed on the Department of Commerce Bureau of Industry and Security (BIS)’s Commerce Control List (CCL) and the Department of Defense Directorate of Defense Trade Controls (DDTC)’s U.S. Munitions List.
Favorable BIS Policy for Civil Aviation, Commercial Passenger Aircraft
BIS Department of Commerce’ BIS also published a Federal Register Notice on January 17, which establishes a presumption of approval for certain license applications to export or reexport to Sudan CCL items controlled for antiterrorism only. The favorable policy applies only to the provision of parts and components related to the safety of civil aviation, or the safe operation of fixed-wing commercial passenger aircraft, or to support railroad operations in Sudan, and, provided there is no benefit conferred to Sudanese military, police, or intelligence forces. For licensing requirements and other licensing policies regarding exports to Sudan, click here: EAR 742.10
President Obama’s Executive Order 13761 provides for a revocation of the provisions of Executive Orders 13067 and 13412 within six months, or by July 12, 2017, provided that the Government of Sudan continues its good behavior. This would be a true lifting, or permanent termination, of the SSR.
In short, sanctions against Sudan have not been permanently terminated; rather, OFAC has issued a General License that authorizes all transactions previously prohibited under the sanctions. The Executive Order provides for the permanent termination of the sanctions within six months, but that will be at the discretion of the next administration and its view of actions taken by the Government of Sudan during that time.
Until the sanctions are fully terminated, exports of agricultural items, medicine, and medical devices remain subject to a statutory restriction that requires delivery of items within twelve months of the contract date, so exporters in these sectors will still need to monitor certain aspects of their transactions.
* The authors are attorneys with Berliner Corcoran & Rowe LLP is a boutique law firm, with offices in Washington, D.C. and San Francisco, focused on international law, export and finance controls and sanctions, litigation, government contract, and corporate and intellectual property law. Michelle Turner Roberts can be reached at: firstname.lastname@example.org